The ‘short of the decade’ and one willful bull’s call for Dow 19,000

By Shawn Langlois

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The Nasdaq’s rally to March 2000 levels and Google’s 10-year IPO birthday have cast a nostalgic light on markets so far this week. And the way things are going these days (up, a lot) nostalgia seems to be suiting traders just fine.

The S&P, after a rough stretch, is now within a whisper of another record; Apple has entered uncharted territory; and Fed Chair Janet Yellen is about to unleash the doves on a receptive Teton audience at the end of the week.

If that last one disappoints and the hawks come out instead, markets could be in store for a stiff pullback. But even that could be Yellen’s gift to traders.

As one fund manager recently told Jeff Saut from Raymond James, buying the 5% dips on the S&P has been a home-run strategy lately. It certainly was the right call two weeks ago, when the S&P took a couple of knocks. So keep some powder dry.

Or we could just floor it all the way to 19,000 on the Dow, if we’re chewing on what Wharton professor Jeremy Siegel keeps serving.

“We live in a world of uncertainty, and bull markets actually climb the wall of worry,” he told CNBC in an interview. “When we see nothing in the future that can worry us at all, I’ll get worried, and I’ll probably tell people to sell stocks.”

Then again, if the “don’t pass” line is your thing, you might want to consider the short opportunity of the decade, as our call of the day dangles out there.

The quote of the day: “I did a lot of things at times with people on Wall Street. A lot of guys are shady, and they did shady things with me, and I don’t trust them.” — Mob boss Michael Franzese in a chat with CNBC in Singapore.

The economy:Traders will be poring over the FOMC minutes later in the day, looking for clues as to when the Fed will start hiking rates. Of course, that’s more of a rear-view glimpse. Friday’s Yellen show is expected to be much more revealing.

The chart of the day:Hertz
/quotes/zigman/439823/delayed/quotes/zigman/439823/lastsaleHTZ was riding along with eight straight days of gains, logging an 18% advance over that time. Pundits like Jim Cramer were loving it. The sky’s the limit. Then the company decided to withdraw guidance, and it’s falling to pieces right now. Zero Hedge posted this chart to show how quickly things can change. “Presented with little comment,” he said, “because if this doesn’t wake people up to the unreality of the stock ‘market’, nothing will.”

The call of the day:An analyst who goes by the name “Achilles Research” isn’t the first guy to call for a Tesla
/quotes/zigman/118681/delayed/quotes/zigman/118681/lastsaleTSLA short, but he’s laying it on thick by throwing it out there as a possible “short of the decade”. The stock has been on fire, with its rally nearing 20% over the past month. The warning signs are firing, says Achilles. “I believe Tesla is one of the most mispriced stocks in the marketplace, but little can be done at any particular moment to correct such a mistake if the herd is stubbornly convinced a valuation of nearly 80 times forward earnings is appropriate for a deeply free-cash-flow negative company,” he said. Read his whole bear case.

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Need to Know (NTK) guides investors to the most important, insightful items required to chart a course ahead of each trading day. Anchored by lead writer Shawn Langlois, NTK will sift through the fire hose of news, commentary and data, from traditional and non-traditional sources, and extract what’s most essential. You can start reading NTK here as it begins publishing at approximately 6:30 a.m. ET, or sign up here to get a version in your email box every morning at approximately 8:45. a.m. ET.